Last month, Standard Chartered Bank bought the performing portfolio of Barclays’ credit cards business in India. Barclays has decided to exit retail assets business in India and is also looking for buyers for its Rs 3,000 crore retail loan portfolio.

The portfolio acquired by Kotak Credit Card is estimated to be around Rs 250-300 crore and comprise nearly 200,000 cards. The private sector lender’s in-house asset reconstruction team will be responsible for recovering the dues from these accounts.

While the deal value was not immediately known, banks in India have to follow the Reserve Bank of India’s (RBI) guidelines on valuation of stressed asset sale.

According to RBI guidelines released in October, 2007 banks while selling non-performing assets have to work out the net present value of the estimated cash flow associated with the realisable value of the available securities net of the cost of realisation. The sale price, generally, should not be lower than the net present value.

Banks in India have once again expanding their credit cards businesses aggressively after a gap of nearly three years.

Standard Chartered Bank became the fifth largest credit card issuer in the country after it bought 170,000 credit cards from Barclays. The foreign lender is believed to have acquired this portfolio at a hefty discount to the book value, which was estimated around Rs 180-200 crore.

The transaction was the second buy-out in the credit card space following IndusInd Bank's acquisition of Deutsche Bank's credit cards business earlier in 2011. Yaad Teri Awarapan 2 Mp3 Song

IndusInd Bank bought 200,000 cards portfolio from Deutsche Bank including the foreign lender's operating platform, technology, and staff. The private bank launched 'IndusInd Credit Cards' on June 1, 2011 and aims to grow the portfolio four-fold to Rs 800-900 crore within three years.

"We believe after three to four years of bloodbath and washout, the credit card industry is now ready to take off once again. This is a high-risk, high-reward business, and we think if we manage the risks properly, the rewards will be higher now," Romesh Sobti, managing director and chief executive of IndusInd Bank, told Business Standard in an interview post acquisition of the cards business.

Even the established players have turned aggressive in growing their credit cards operations.

HDFC Bank, the largest issuer of credit cards in India, aims to double its portfolio in the next couple of years. The bank, which has 5.05 million cards, expects its portfolio to touch 10 million in two years, including two million cards exclusively for its women customers.

The bank also launched 'Infinia' cards last year for the uber-rich community, positioning it against the American Express, or Amex cards.

Bankers said that unlike the last time, there will not be significant erosion in the banks' asset quality, since the expansion strategies are backed by rich information on borrowers' credit histories obtained from the credit bureaus.

In September, 2011 the number of outstanding cards in the industry increased for the first time in eight months to 17.6 million. The number of cards has remained around the same level since then.